Speculative asset price dynamics and wealth taxes
type: Item
instance of: scholarly article
title: Speculative asset price dynamics and wealth taxes
zbMATH Open document ID: 1489.91287
author: Sarah Mignot
author: Fabio Tramontana
author: Frank Westerhoff
published in: Decisions in Economics and Finance
publication date: 2022-01-06T00:00:00Z
review text: The paper extends the model of \textit{W. A. Brock} and \textit{C. H. Hommes} [J. Econ. Dyn. Control 22, No. 8--9, 1235--1274 (1998; Zbl 0913.90042)] along two directions. First, the policymakers are allowed to impose a tax on speculators' wealth. Second, the supply of (outside) shares of the risky asset is allowed to be positive. In particular, this assumption implies that the fundamental value of the risky asset entails a risk premium (which is absent in the original model by Brock \& Hommes). The authors show that higher wealth taxes increase the risky asset's fundamental value, enlarge its local stability domain and may prevent the birth of nonfundamental steady states. The analysis suggests that wealth taxes tend to stabilize the dynamics of financial markets.
reviewed by: Claudio Fontana
Mathematics Subject Classification ID: 91G30
Mathematics Subject Classification ID: 91B64
zbMATH DE Number: 7452712
zbMATH Keywords: asset price dynamics
zbMATH Keywords: wealth taxes
zbMATH Keywords: heterogeneous expectations
zbMATH Keywords: nonlinear dynamics
zbMATH Keywords: stability and bifurcation analysis
MaRDI profile type: Publication
full work available at URL: s10203-021-00340-z
OpenAlex ID: W3183417482
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DOI: 10.1007/S10203-021-00340-Z
description: scientific article; zbMATH DE number 7452712